- Posted on February 24, 2022
- by Benedict Dohmen
Is Your Amazon FBA Business Ready For An Exit? KPIs Can Give You A Clue
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- Posted on April 6, 2022
- by ManageByStats, tools & services for Amazon sellers
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KPIs, or Key Performance Indicators, give you quick insight into the health of your Amazon business. They can also tell you if you might be ready for an exit.
Many sellers who have invested tons of effort into creating and expanding a successful Amazon business now have their eye on selling and enjoying the fruits of that labor. Fortunately for those in that camp, a new era kicked off a few years ago and has been on a tear ever since.
Companies like Benitago, for example, actively court self-starting Amazon business owners who are looking to sell their businesses.
In a sense, there’s never been a better time to consider a strategic exit.
But what metrics give you a clue as to your viability? How do you define your KPIs?
Let’s take a look at some helpful tips for determining what your KPIs should be. Over the years ManageByStats has helped tens of thousands of Amazon sellers manage and grow their Amazon businesses, so we’ve done our own research and narrowed down what have proven to be the best indicators.
Call them the “Fantastic Four” of Key Performance Indicators.
It starts with a question.
Table of сontents:
What Shows Me The Real Health Of My Business?
Obvious as it sounds, that’s a great place to start.
If your business were a machine (and in many ways it is), you’d want to know things that tell you exactly how well it’s running, if any danger looms, etc. For example, if it were a car you’d like to know the fuel level. Especially for a long trip.
But would that matter minute-by-minute while you’re on the road?
Oil pressure might be a better thing to keep a steady eye on. Temperature. Maybe even speed. On the other hand, you might or might not consider things like radio volume or seat position KPIs. Those things are important, in their own way, but they may not be the sort of at-a-glance info you need in order to quickly assess the current state of your machine.
And so, though it’s a simple exercise, the answers to that question give you the monitoring system you need to easily, effectively drive your business.
Once you have your KPIs you’ll want to see them in comparison to previous periods. In the example of the machine, you might also want to know how your speed matched up at previous points, in order to see how your current performance compares to how you were doing in the past.
And that’s the real indicator. Trends.
Measuring Performance
Being able to see comparative ranges over given periods is a key part of any KPI selection. Trends are the real value in any management analysis. That sort of indication of performance will be of particular interest to any company looking to merge with or acquire yours.
For management, in a KPI snapshot analysis you’re more interested in how you’re doing in comparison to your normal, viable range.
The period of time you choose to monitor is therefore key. Is one month the right range for the selected KPI? Should you look at a longer period? Shorter?
Longer ranges, typically, are not the best selection periods for KPIs, as your goal is to monitor the health of your business in action, giving you time to make adjustments and move it in the direction of expansion.
Choose a time comparison that gives you vital, actionable insight.
It May Not Be What You Think
Some potential KPIs seem more obvious than others, but obvious doesn’t always make them the best. Things like revenue, quantity sold and other important stats are excellent candidates for consideration, but is it more important to know your profit? Your inventory levels?
Profit may be a better quick-check of the health of your business. Revenue is great, it’s the lifeblood that fuels your business, but if every drop of fuel is being expended to keep the machine running …
That’s not very healthy, right?
And so profit may be a better at-a-glance metric for your needs.
The idea with KPIs is to select the ones that best reflect the health of your business, and to not crowd your attention. To do that you need KPIs that reflect what you need to know.
So, what do we recommend?
The Fantastic Four of KPIs
Multiple metrics could be named KPIs. However, from years of evaluation, providing monitoring tools and multiple other solutions and automations to Amazon sellers, we at ManageByStats have isolated four (4) as the most effective overall.
We present them here as the best indicators of how your Amazon business is performing.
The KPI statistics we recommend you use are:
- Sessions
- Conversion Percentage
- Profit
- Average Review
Tracking trends for these four metrics gives a good indication of the real-time health of your Amazon business.
Sessions and Conversion Percentage show traffic to your Amazon listings and how well those listings are turning into sales.
Profit shows the profitability of the account, and Average Review gives an indication of how the products are doing in terms of customer response.
These four metrics have been shown to be key for taking the pulse of your Amazon business.
Are You Ready To Exit?
The right KPIs will let you know. Whether you’re using ManageByStats, another suite of tools, or you simply let the acquiring company do the evaluation and make a determination, knowing your KPIs in advance tells the tale.
An excellent overview of how to grow your Amazon business for an exit can be found in this article.
In the end, every business is unique, and you’re the best judge of what to monitor for that exquisite oversight. When naming KPIs for management, you may choose differently than above.
The important thing is to be in the know.
Find out where your data lives, gather it, sort it, group it and begin planning how to build the dashboard that will become your central, easy, clear, at-a-glance control point where you can effectively oversee and manage your Amazon FBA business, grow it and, when the time is right, be ready for that glorious ride into the sunset.
You can also use an Amazon ad agency to optimize your ads and help track ad related KPIs. Feel free to checkout Sermondo’s listings for potential agencies as well as other services (https://sermondo.com/amazon-
To your success.
Your ManageByStats Team
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